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25 Cards in this Set
- Front
- Back
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What are examples of tangible assets? |
land, buildings, equipment, natural resources |
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What are examples of intangible assets? |
patents trademarks copyrights franchise goodwill |
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Definition of capitalize |
recording an expenditure as an asset |
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Definition of depreciation |
allocation of a cost of a tangible asset over its service life |
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What is a basket purchase? |
Purchase of more than one asset at a time for the same price. |
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What is depletion? |
allocation of the cost of a natural resource over its service life |
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Components of a patent |
20 year period when purchased: capitalized for purchase price and filing fees when internally developed: capitalized for legal and filing fees
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Definition of a copyright |
Right of protection given to the creator of a public work |
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What goes into the cost of the asset on the balance sheet when we purchase land or equipment? |
cost of asset + all expenditures necessary to ready for use |
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Definition of trademark |
word, slogan, or symbol that distinctively represents a company, product or service |
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When are intangible assets capitalized or recorded as an expense in regards to a legal defense? |
Capitalize: If it increases future benefits Expense: If it benefits only the current period |
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Definition of Goodwill |
Value of the company as a whole, over and above the value of its identifiable net assets |
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How is goodwill calculated? |
purchase price- fair value of the net assets required |
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Definition of a franchise |
Local outlets that pay for the right to use the franchisor's name and sell its products |
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Definition of Depreciation |
Process of allocating to an expense the cost of an asset over its service life |
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What is the journal entry to record depreciation? |
Debit Credit Depreciation expense (cost/years) Accumulated depreciation (cost/service life years) |
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What is the contra asset account to record the total depreciation taken to date? |
Accumulated depreciation |
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How do you calculate the book value of equipment with depreciation? |
Book value= origanl cost - current balance in accumulated depreciation |
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What is the equation for depreciation expense under the straight line method? |
(asset's cost - residual value) / service life or Depreciable cost x depreciation rate |
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What is the journal entry for amortization for a franchise? |
Amortization expense Debit Franchise Credit |
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What is the journal entry for amortization for a patent? |
Amortization Expense Debit Patent Credit |
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Which intangible assets are not subject to amortization? Examples? |
Those with indefinite life Good will Trademarks |
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Which intangible assets are subject to amortization? |
Those with finite useful life Patents Copyrights Trademarks Franchise |
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What is the journal entry for a long term asset with a gain? |
Cash Debit Accumulated Deprec. Debit Equipment Credit Gain Credit |
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What is the journal entry for a long term asset with a loss? |
Cash Debit Accumulated Deprec. Debit Loss Debit Equipment Credit |
